Leather industry operating under 50%
LEATHER industry in Zimbabwe has fallen on hard times with indications the sector was operating at far below 50% capacity and some players might cease operations due to unfavourable economic conditions, NewsDay has established.
BY MTHANDAZO NYONI
Exports of footwear, leather articles and upholstery leather declined to $3,3 million in 2014 from $60,5 million in 2002
According to the Abattoirs’ Association of Zimbabwe chairperson Godfrey Chanetsa, the sector had not recovered since the government introduced a levy on exports of raw hides to encourage beneficiation in 2014.
The government in 2014 introduced a $0,75 levy tax on exports of raw hides in a move that was expected to boost value addition in the leather industry as well as curtail the exportation of raw hides by local abattoirs.
“The leather industry is extremely in a bad state and players are considering downsizing and retrenching workers for survival. These measures are in the process. We can’t move products because the butcheries are also struggling.
We are in catch-22 and it won’t be surprising that some will cease operations,” he said.
Chanetsa said as long as the economy was still struggling, their survival hung in the balance.
He said politicians should address economic situation in the country before it went off hand.
He said due to economic hardships, the industry was operating at far below 50% of capacity.
Chanetsa said the Zimbabwean market was too small to absorb their products, adding their survival lay in the foreign market.
In 2015, the association revealed that the viability of abattoirs had been compromised by the introduction of the levy as it would raise the price of slaughter services because the hide was a part of that.
Chanetsa said in 2015 the industry performed badly due to the liquidity crisis coupled with a number of challenges such as power outages and reduced consumer spending.
ZimTrade recently revealed that since 2012, Zimbabwe’s exports of leather products had been declining. It said the country exported $374 000 worth of leather products in 2014 compared to $591 000 and $486 000 in 2012 and 2013 respectively.